Think About It: Lapid’s rental housing project

The goal of the finance minister's proposal is to construct 150,000 housing units over a period of 10 years.

By
October 6, 2013 22:27
Finance Minister Yair Lapid

Finance Minister Yair Lapid 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

 
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A week ago Sunday the housing cabinet approved a proposal by Finance Minister Yair Lapid to establish a new government corporation to advance a project for the construction of rental housing. The goal is to construct 150,000 housing units over a period of 10 years.

Good news for young couples, and those requiring subsidized public housing? I wouldn’t recommend anyone hold their breath. The likelihood of this project getting off the ground is no better than 50:50 (to be on the optimistic side).

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Though the project was approved by the housing cabinet, it must still be approved by the government as a whole, and will encounter bitter opposition, especially from the professional echelon in the Finance Ministry (as opposed to Lapid’s personal staff),and the Construction and Housing Ministry.

The reason? The Finance Ministry opposes the project because it claims it is based on shaky economic foundations.

The objection of the Housing Ministry is more political, and is based on the fact that according to the proposal, the new corporation is to be controlled by the Finance Ministry rather than the Housing Ministry, creating an alleged redundancy with existing bodies currently responsible for rental housing (today, exclusively subsidized housing for social cases).

The approach of the Treasury professionals is not surprising. For several decades the Treasury has insisted that all projects involving public financing must be based on economic viability – which is OK from a professional economic point of view.

The problem is that is a well-ordered state policy is determined by the government, and the professionals are tasked with working out ways of realizing policy – not approving it or vetoing it.



In fact, if the Treasury’s approach had prevailed in the past, the whole Zionist endeavor since the beginning of the 20th century would have had to be shelved, and after the establishment of the state many vital national projects, such as the National Water Carrier of the early 1960s for conveying water from the Jordan River to the Negev, would never have been realized.

At the first major Zionist meeting after the First World War, held in London in July 1920, the prominent American Zionist and justice of the US Supreme Court Louis Brandeis advocated that Zionist institutions follow the principle of Americanstyle efficiency and economic viability in their activities in Palestine, arguing that the goal should be to create a situation in which private investment would do the job.

The job of the Zionist authorities, he added, was to create the conditions that would make private investment safe and profitable, citing the example of eradicating malaria as an example.

Even though in 1920 when Brandeis spoke the socialist workers parties were not yet predominant in Zionist institutions (that was to occur in 1935), Brandeis encountered strong opposition from the liberal European Zionists who were in control, and the American Zionists were neutralized for at least a decade (the 1929 disturbances in Palestine, and the rise of Nazism in Germany, reversed that). What the Zionist leaders understood was that whatever sort of national home one envisaged for the future, at that juncture private investment would be marginal, and without public economic planning and activity there could be no future.

Incidentally, at that time even liberal supporters of laissez faire economics, like the father of revisionist Zionism, Ze’ev Jabotinsky, believed that governments are responsible, inter alia, for ensuring that the population has adequate nutrition, housing, clothing, education and medicine.

The American Tea Party Republicans of today would undoubtedly have labeled Jabotinsky a dangerous communist.

As the years went by the balance between public economic planning and activity and private economic activity changed. Clearly the current economic reality offers many more opportunities for private initiative than ever before. The problem is that the balance has gone much too far in favor of private initiative, and the government has been divested of (or has voluntarily given up) its ability to act effectively, especially in those areas that Jabotinsky believed it should play a central role in – housing included.

There is no doubt that the housing situation in Israel is unsatisfactory.

The fact that housing – both for purchase and rental – is so expensive, and beyond the reach of many working citizens, whose parents do not have the means to assist them, and that the state is unable (even if the will were there – and it is not always there) to provide housing solutions to the weakest sections of the society, who even according to Israel’s draconian laws are entitled to subsidized housing, is no less than scandalous.

Perhaps if the free economy was really free, and not distorted as it is in Israel, market forces could be relied on to do most of the work. But Israel’s insane land policy, which means that over 90 percent of the land in Israel is state-owned and managed in a very bureaucratic and conservative manner, in addition to the fact that despite calls since the late 1980s for greater mechanization of the construction industry, for some inexplicable reason there is strong industry resistance to the idea, are among the reasons that free market forces are unable to supply the required demand at affordable prices.

Though Lapid’s proposed project might involve cost to the state budget, I have no doubt that once the government starts to act in the field of rental housing, private initiatives in this sphere will also emerge; the government might not have to actually construct the full 150,000 units.

However, one thing is certain: if the government does not act, no one will.

But more generally, isn’t it time our government, as a government, starts setting policy in various vital spheres, and then requiring professionals to suggest ways and means of implementing it, rather than excuses not to? It can be done if the will is there.

Nobody can tell me that Jewish settlement activities in Judea and Samaria have an economic justification.

It is sheer ideology, which one can accept or reject. However, the government has found ways of financing these activities – sometimes contorted and distorted ways, but nevertheless ways.

So why can’t this work in other fields, in which there is much broader consensus, such as the fields of nutrition, housing, clothing, education and medicine? Is there really anyone in the current Israeli government who does not believe that there is need for affordable housing, housing solutions for the needy, food products that are not exorbitantly priced (up to 50 percent higher than in most European countries and the US), education that offers everyone equal opportunities, etc.? Well, perhaps we should count our blessings and stop complaining.

At least no one in Israel is fighting national health insurance, and no matter how serious our governability problem, the Opposition cannot simply cause the government to shut down in an irresponsible act of blackmail.

The writer is a retired Knesset employee.

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